Costco has announced that a major shift in the way its members shop has boosted profitability.
The wholesale retailer first rolled out a plan in early 2024 to crack down on customers sharing membership cards by scanning them just as shoppers walk in.
Ron Vachris, who took over as chief executive on Jan. 1, told investors that the idea of scanning members’ cards at the door has made Costco stores even more efficient. It is now planned to be rolled out more broadly.
“We are testing some scanners at the front door,” he said during the third-quarter earnings conference call in May. “They are significantly speeding up our registrations when we are able to scan and verify memberships at the front door.”
Faster service at the checkout counter has a positive effect on customer acquisition, as it frees up space in normally overcrowded car parks.
This new technology displays a photo of the cardholder on a screen, which the worker at the entrance can compare with the person in front of him.
With its new strategy to verify whether customers are really members, Costco seems to be following Netflix’s example
Pictured here is a setup at the entrance to a Costco warehouse in Issaquah, Washington, that allows a store employee to view the photo associated with a membership card.
Costco appears to be following the lead of Netflix, which began imposing restrictions on people sharing their account passwords with loved ones and friends in early 2023.
That decision earned Netflix an additional 9.3 million new customers, bringing its total subscriber base to nearly 270 million.
It’s unclear when these machines will be rolled out more widely at Costco’s more than 600 locations across the United States, but a handful of stores in Washington state are already using them.
Users in Reddit He commented on this new direction when it was first being tested earlier this year, and received widespread support.
One person pointed out that most gyms make their members scan their IDs at the entrance before entering, “so it’s funny that people are probably mad that Costco does the same thing.”
Another wrote: “I don’t really understand the problem. A machine scanning your membership card is not much different than a person you show your card to. It might be more efficient.”
While members won’t be able to send their sons or daughters to Costco with their card under this new system, Vachris said it will end up greatly improving the overall customer experience.
Partially automating the customer check-in process “rotates parking spaces much faster” and could allow for “gas extensions where needed as well,” Vachris said.
Hundreds of people gathered Reddit Last year, many complained about the parking lots at their local Costcos, with many describing them as “a Mad Max situation” even at the best of times.
Others lamented that long lines at gas stations, which are often right next to the parking lot entrance, make maneuvering even more difficult.
“Costco does a lot of things right, but parking isn’t one of them,” one person wrote.
Pictured: A crowded parking lot at a Costco store in Richmond, California.
Long lines for gas sometimes exacerbate the maneuverability problem in Costco parking lots.
Costco Chief Financial Officer Gary Millerchip said in May that the ability to buy goods online and pick them up in-store will “expand” over time. Currently, members can only do this with tech items and jewelry.
During the May conference call, Costco CFO Gary Millerchip also hinted that the ability to buy products online and pick them up in-store will be “expanded.”
Currently, members can only do this with in-stock tech products, such as iPads and laptops, and various forms of jewelry.
“We can’t expand into every category, but we are expanding right now into TVs and other electronics,” Millerchip said. “We see that as a real opportunity for us.”
Millerchip also promoted a recently reached agreement with Uber which will now allow customers in 17 US states to order food from Costco through Uber Eats.
Despite posting $58.52 billion in revenue in the third quarter, Costco announced in July that it would raise its membership fee starting in September.
It’s the first increase since June 2017, and will increase by $5 a year for the standard membership, taking it from $60 to $65 annually.
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